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USD/CAD is Bullish Above Key Support

Earlier this week, I noted a double top attempt by the USD/CAD. However, being that the pair was in a strong prevailing uptrend, I noted that a break above 1.3150 should signal a failed double top and a bullish continuation.

USD/CAD 1H Chart 8/5
(click to enlarge)

Indeed price climbed above 1.3150 and made a new high on the year a 1.3213. However, we then saw a strong correction back towards common support just above 1.31. This swing does make it appear more likely that USD/CAD has lost its bullish momentum and that it is ready for a significant period of consolidation or bearish correction. 1.31 is becoming an important support, and a break below it can shift the USD/CAD outlook from bullish to neutral in the medium-term.

However, if we a break below 1.31 but then a pullback puts USD/CAD back above 1.3150, we would have to consider a possible "false-top", which can translate into a bullish continuation signal.

Basically, the 1.31 and 1.3150 levels are going to be key in the short-term. Monitor how price reacts around these levels for more technical clues on the USD/CAD.